Identifying the financial barriers to deliberative, affordable apartment development in Australia

Purpose - – The purpose of this paper is to identify the financial barriers to the supply of affordable apartments in Australia and examine whether demand aggregation and “deliberative development” (self-build) can form a new affordable housing “structure of provision”. Design/methodology/approach - – Market design, an offshoot of game theory, is used to analyse the existing apartment development model, with “deliberative development” proposed as an innovative alternative. Semi-structured interviews with residential development financiers are used to evaluate whether deliberative development could obtain the requisite development finance. Findings - – This investigation into the financial barriers of a deliberative development model suggests that, while there are hurdles, these can be addressed if key risks in the exchange process can be mitigated. Hence, affordability can be enhanced by “deliberative development” replacing the existing speculative development model. Research limitations/implications - – Market design is a new innovative theoretical approach to understand the supply of housing, offering practical solutions to affordable apartment supply in Australia. Originality/value - – This research identifies financial barriers to the supply of affordable apartments; introduces theoretical understandings gained from market design as an innovative solution; and provides evidence that a new structure of building provision based on “deliberative development” could become a key means of achieving more affordable and better designed apartments.